Dominion Announces First-Quarter Earnings of
$1.20 Per Share
Results in line with pre-announced expectations
Conference call scheduled for 10 a.m. EDT today
RICHMOND, Va. – Dominion (NYSE: D) announced today unaudited
consolidated operating earnings for the first quarter ended March 31, 2002,
of $322 million ($1.20 per share), compared with operating earnings of $298
million ($1.20 per share) for the same period in 2001. First-quarter 2001 operating
earnings exclude an after-tax charge of $136 million (55 cents per share) related
to the buyout of power purchase contracts and non-utility generating plants
previously serving the company under long-term contracts. Reported earnings
per share for first-quarter 2002 were $1.20 per share and for first-quarter
2001 were 65 cents per share. There were no special items recorded in the first
quarter of 2002. Earnings were in line with company expectations pre-announced
on April 11.
Thos. E. Capps, chairman, president and chief executive officer,
said: "During the first quarter, we made significant progress in executing
our business plan. We continued to strengthen the balance sheet and we posted
solid earnings despite a 19-cent per share earnings impact from one of the warmest
winters on record, and a 13-cent per share timing impact from natural gas 'corporate'
hedges. First-quarter earnings clearly demonstrated Dominion's potential earnings
power. Dominion is on track to deliver earnings of $4.90 to $4.95 per share
this year and 10 percent average annual growth thereafter."
Other selected first-quarter highlights include:
$938 million of equity capital through the issuance of
10.3 million shares of common stock and 6.6 million units of mandatory convertible
securities.
Added 300 megawatts of generation during the quarter,
bringing portfolio to more than 22,100 megawatts.
Reached agreement to acquire State Line power station.
With the addition of State Line and additional greenfield generation in late
stages of development, Dominion's power generation portfolio is expected to
grow to 24,000 megawatts by summer - a 9 percent increase over the year-end
2001 level.
Added 266 billion cubic feet equivalent to proved gas
and oil reserves, a quarterly replacement ratio of 240 percent, bringing total
proved reserves to 5.1 trillion cubic feet equivalent.
Announced as winning bidder for lease rights on 37 blocks
in the Central Gulf of Mexico, potentially increasing the lease inventory
of exploration prospects by 20 percent and offshore lease acreage by 23 percent.
Added 16,151 net new gas and electric franchise customers
during the quarter.
Reduced debt to capitalization ratio from 59.2 percent
at year-end 2001 to 56.5 percent at the end of the first-quarter 2002.
Commodity hedging impacts and position
The corporate hedges are derivative contracts being used
by Dominion as economic hedges to obtain desired prices for sales of certain
volumes of natural gas expected to be produced this year. However, Dominion
did not designate these contracts as hedges for accounting purposes. As described
in a news release issued April 11, 2002, the first-quarter impact from the corporate
hedges is purely a timing issue when the financial settlement of the corporate
hedges is considered in combination with physical gas sales over the remainder
of the year. The combination of physical gas sales and the financial settlement
of the corporate hedges is expected to contribute to better-than-expected earnings
for the sum total of the remaining three quarters of 2002, offsetting the negative
impact in the first quarter. However, impacts on any individual quarter could
be either positive or negative relative to expectations.
Including the corporate hedges, Dominion has hedged approximately
90 percent of its expected natural gas production and has hedged about 75 percent
of its expected oil production for 2002. In addition, Dominion has hedged more
than 50 percent of expected 2003 natural gas and oil production. There are currently
no corporate hedges on 2003 production. In addition, Dominion has hedged approximately
85 to 90 percent of anticipated sales from its power generation portfolio for
this year and next.
Earnings breakdown by operating segment
Dominion Energy contributed $141 million (52 cents per share)
to first-quarter 2002 earnings compared to $160 million (64 cents per share)
in the first quarter of 2001. The change in Dominion Energy's first-quarter
2002 earnings is attributable to warmer-than-normal weather in the company's
electric service area, the negative 13-cent per share corporate hedge impact
and other factors, offset by customer growth in the company's electric service
area and gains in Dominion Energy Clearinghouse.
Dominion Delivery earned $147 million (55 cents per share)
in its first quarter compared to $157 million (63 cents per share) for the same
period in 2001. The change in Dominion Delivery's first-quarter earnings is
attributable to warmer-than-normal weather in the company's electric and gas
service areas and other factors, offset in part by customer growth and O&M
expense savings.
Dominion Exploration & Production (E&P) contributed
$88 million (33 cents per share) to first-quarter 2002 operating earnings, up
from $71 million (29 cents per share) in the first quarter of 2001. The change
in Dominion E&P's first-quarter earnings is primarily attributable to higher
production, partially offset by lower average realized prices.
The corporate segment, including Dominion Capital, posted
net expenses of $54 million (20 cents per share) for the quarter, compared to
net expenses of $90 million (36 cents per share) in the first quarter of 2001.
The improvement is attributable to the elimination of goodwill amortization
expense and other factors.
Legal entity results
While Dominion manages its daily operations as described
above, assets remain wholly-owned by its legal subsidiaries, Virginia Electric
and Power Company (Virginia Power), Consolidated Natural Gas Company (CNG),
and Dominion Energy Inc. (DEI), pending full implementation of electric and
gas deregulation legislation in the company's service areas.
First-quarter 2002 earnings for Virginia Power were 55 cents
per share, compared to 62 cents per share in the first quarter of 2001. First-quarter
2002 earnings for CNG were 75 cents per share, compared to 72 cents per share
in 2001. DEI earned 5 cents per share in the first quarter of 2002, compared
to 15 cents per share in the first quarter of 2001.
Conference call for investors / media
Dominion will host a conference call for investors today
at 10 a.m. EDT during which Dominion management will review first-quarter 2002
earnings. Members of the media are also invited to listen.
Domestic investors who wish to participate in the conference
call should dial 800-314-7867. International investors should call 719-219-0214.
The confirmation number required to join the call is 785609. Participants
should dial in five to 10 minutes prior to the scheduled start time.
A live web cast of the conference call will be available
on the company's investor information page at www.dom.com/investors.
A tape recording of the conference call will be available
from approximately
1 p.m. EDT April 18 through 11 p.m. EDT April 23. Domestic investors may access
the recording by dialing 888-203-1112. International callers should dial
719-457-0820 to access the recording. The access code for the replay
is also 785609. A replay of the conference call also will be available
on the company's investor information home page by the end of the day April
18.
Dominion is one of the nation's largest producers of energy,
with a production capability of more than 3 trillion British thermal unit of
energy per day. Dominion has a diversified and integrated energy portfolio consisting
of over 22,100-megawatts of generation, 5.1 trillion cubic feet equivalent of
proved natural gas reserves, 7,600 miles of natural gas transmission pipeline
and the nation's largest underground natural gas storage system with more than
950 billion cubic feet of storage capacity. Dominion also serves 3.9 million
franchise natural gas and electric customers in five states. In addition, Dominion
owns a managing equity interest in Dominion Fiber Ventures LLC, owner of Dominion
Telecom. For more information about Dominion, visit the company's web site at
www.dom.com.
This release contains forward-looking statements that
are subject to various risks and uncertainties. Discussion of factors that could
cause actual results to differ materially from management's projections, forecasts,
estimates and expectations may include factors that are beyond the company's
ability to control or estimate precisely, such as estimates of future market
conditions, estimates of proved and unproved reserves and the behavior of other
market participants. Other factors include, but are not limited to, weather
conditions, economic conditions in the company's service area, fluctuations
in energy-related commodity prices, trading counterparty credit risks, risks
associated with successfully executing the telecommunications business plan
and other uncertainties. Other risk factors are detailed from time to time in
the company's Securities & Exchange Commission filings.
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View the Preliminary Earnings Report - Operating Segments,
for March 2002 (PDF document, requires the free
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